Companies and Intellectual Property Commission

Compliance Obligations

The Companies Act requires all companies to maintain their company records. A company must at all times have a copy of its Memorandum of Incorporation (MOI) and any amendments or alterations to it, as well as any rules that apply to the company in terms of its MOI. The company is also required to keep a register of its shares and its company secretary and auditor, to the extent that the company is required to make such appointments. In addition, the company is required to keep the following records for a period of seven (7) years:

A record of its directors, including the following detailed information about each director:

The full name and any former names,

the identity number or date of birth,

the nationality and passport,

the occupation,

the date of their most recent election or appointment;

the name and registration number of any other company or foreign company that the director is a director of;

the address for service for that director; and

any professional qualifications and experience of the director in the case of a company required to have an audit committee.

Copies of

All reports presented at an annual general meeting;

Annual financial statements required by the Act;

Any accounting records required by the Act;

Notices and minutes of all shareholder meetings, any resolutions taken at those meetings, as well as the documents made available to the shareholders in relation to those resolutions;

Copies of any written communication sent by the company to shareholders; and

Minutes of meetings and resolutions of directors, directors committees, or audit committees.

Any person who holds shares or a beneficial interest in the company is entitled to view and obtain copies of such documents. Any other person may inspect such records at a cost.

Accounting Records

The Companies Act, 2008 requires all companies to keep accurate and complete accounting records, which must be kept and be accessible at the company’s registered office.

Appointment and rotation of auditors

It is not mandatory for a private or personal liability company to appoint an auditor, unless the company is required to produce audited financial statements. If a private or personal liability company elects to appoint an auditor, or is required to do so, and they are not appointed at incorporation, they must be appointed by the directors or by an ordinary resolution of the shareholders within 40 business days of incorporation of the company.

An auditor may be re-appointed annually and may serve a maximum of five consecutive financial years. If an individual has served as the auditor or designated auditor of a company for 2 or more consecutive financial years, and then ceases to be the auditor or designated auditor, the individual may not be appointed again as the auditor or designated auditor of that company until after the expiry of at least two further financial years. If a company has appointed 2 or more persons as joint auditors, the company must manage the rotation in such a manner that all of the joint auditors do not relinquish office in the same year.

Click here to view steps on how to appoint, resign or remove auditors.

Rotation of auditors

In terms of section 92 of the Companies Act, 2008, the same individual may not serve as the auditor or designated auditor of a company for more than 5 consecutive financial years.

If an individual has served as the auditor or designated auditor of a company for 2 or more consecutive financial years, and then ceases to be the auditor or designated auditor, the individual may not be appointed again as the auditor or designated auditor of that company until after the expiry of at least two further financial years.

If a company has appointed 2 or more persons as joint auditors, the company must manage the rotation required by this section in such a manner that all of the joint auditors do not relinquish office in the same year.

Annual Returns

All companies (including external companies) and close corporations are required by law to lodge their annual returns with CIPC within a certain period of time every year. An annual return is a statutory return in terms of the Companies and Close Corporations Acts and therefore MUST be complied with. Failure to do so will result in the Commission assuming that the company and/or close corporation is not doing business or is not intending on doing business in the near future. Non-compliance with annual returns may lead to deregistration, which has the effect that the juristic personality is withdrawn and the company or close corporation ceases to exist.

Companies have 30 business days from the date that the entity become due to lodge annual returns before it is in non-compliance with the Companies Act.

Annual returns can only be filed electronically.

Always use your customer code to transact with CIPC.

To calculate outstanding AR fees, click here. First log in using your customer code and password, and then click on AR calculator.

Steps to file Annual Returns

Annual returns must either be lodged electronically on CIPC's website or on a CIPC Self-Service Terminal (SST). The process of lodging an annual return at a SST is simpler than the online process, as it allows for payments after completion of the transaction. However, the SST process is only suitable for companies and close corporations where the director or member lodges the annual return him/herself.

Type in the registration number (year/sequence/type) at the Enterprise Number field and click Validate. Confirm whether the provided registration number corresponds with the enterprise detail being displayed. If not, reconfirm registration number by typing it in at the Enterprise Number field and click Validate. If correct, click Continue.

A screen will be displayed indicating lodged annual returns as well as outstanding annual returns. Type in the relevant turnovers for each outstanding year and click on "Calculate Outstanding Amount";

The screen will display the total amount due.

Step 3: Deposit funds

Deposit the correct amount into the CIPC bank account. For the bank account details, click here. Use your customer code as reference when depositing funds into the CIPC account.

Step 4: File annual return and generate certificate

Type in the registration number (year/sequence/type) at the Enterprise Number field and click Validate. Confirm whether the provided registration number corresponds with the enterprise detail being displayed. If not, reconfirm registration number by typing it in at the Enterprise Number field and click Validate. If correct, click Continue.

A screen will be displayed indicating lodged annual returns as well as outstanding annual returns. Type in the relevant turnovers for each outstanding year and click on "Calculate Outstanding Amount";

The screen will display the total amount due. Click on "Pay";

The screen will summarise the transaction detail. Click on "Update Details to Pay";

The annual return is pre-populated except for the empty fields under the Enterprise Details heading.

Select [+] Expand to open details of each section of the annual return and confirm if information is correct.

If the information displayed has changed, tick the appropriate tick box at the relevant heading.

Private or personal liability companies that are required to be audited by the Companies Act, 2008 or regulation 28, must file a copy of the latest approved Audited Financial Statements on the date that they file their annual return with the CIPC.

The following private companies are required to have their annual financial statements audited:

Any private or personal liability company if, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5 million;

Any private or personal liability company that compiles its financial statements internally (for example, by its financial director or one of the owners) and that has a Public Interest Score (PIS) of 100 or more;

Any private or personal liability company that has its financial statements compiled by an independent party (such as an external accountant) and that has a Public Interest Score (PIS) of 350 or more;

Unless the company has opted to have its annual financial statements audited or is required by its Memorandum of Incorporation (MOI) to do so, a private or personal liability company that is not managed by its owners may be subject to independent review if:

It has its financial statements compiled independently at its Public Interest Score is between 100 and 349;

Private or personal liability companies that are not required to have their financial statements audited, may elect to voluntarily file their audited or reviewed statements with their annual returns. If such companies choose not to file a full set of financial statements, they must file a financial accountability supplement with their annual return.

Steps to file your annual financial statements

To file a financial accountability supplement, click here and complete the required fields.

Appointment of Social and Ethics Committee

Private or personal liability companies with a Public Interest Score (PIS) above 500 in any two of the preceding five (5) years are required to have a Social and Ethics Committee. Companies may apply for exemption from having a Social and Ethics Committee to the Companies Tribunal. Subsidiaries of companies that have a Social and Ethics Committee are not required to have a committee.

Social and Ethics Committees are responsible to monitor a company’s activities with regard to its contribution to

Social and economic development;

Good corporate citizenship;

Environment, health and public safety;

Consumer relationships; and?

Labour and employment.

Solvency and reckless trading

The Companies Act, 2008, states that a company must not carry on its business recklessly, with gross negligence, with intent to defraud or trade under insolvent circumstances. (Sect 22) If a company trades in such circumstances, the Commission may require the company to cease carrying on business.

Although “trading under insolvent circumstances” is not defined in the Act, it is accepted to mean that a company does not meet the “solvency and liquidity test” criteria. There are many trading companies which are liquid, meaning they can pay their debts as they become due, but not necessarily solvent as defined in the solvency and liquidity test.

In terms of the “solvency and liquidity test”, solvency relates to the assets of the company, fairly valued, being equal or exceeding the liabilities of the company. Liquidity relates to the company being able to pay its debt as they become due in the ordinary course of business for a period of 12 months.